RED HERRING

Lawsuits against P2P applications are old news in the peer file sharing market. So the story goes, a company gets sued, makes a few compromises to please the record industry and stays alive if it has the financial means to do so. But another application or service pops up to fill its place.

Now some analysts think the record industry should stop suing and instead look for ways to benefit from the technology. “The major label recording business is in heaps of trouble… they’ve [spent time] building a strategy to knock down P2P that might have been better spent on some other initiatives. But they’re certainly showing no signs of moving off it,” said Joe Fleischer, CEO of media research firm Big Champagne.

Despite being in the middle of a legal battle with the record industry, P2P service LimeWire is in talks with record labels and working on a “conversion plans for users,” said LimeWire consultant Laura Tunberg with consulting firm We Get It. She explains that LimeWire wants to give users legal purchasing options.

“A lot of users want a legitimate product,” said Ms. Tunberg. “We believe a certain percentage of our user base will be converted, and that this is a viable business model.”

“If you take away the free, a lot of the appeal of peer-to-peer clearly goes away,” said Mr. Mitchell. “It’s going to take some innovative and clever software development to drive the legitimate marketplace.”